Barry, whose Redwood City music-sharing firm ignited the copyright battle now engulfing Silicon Valley and Hollywood, was a panelist at a Digital Rights Summit hosted by microchip giant Intel Corp. and the year-old public advocacy group DigitalConsumer.org.

"This isn't just about music and movies; it affects the entire technology industry," said DigitalConsumer.org co-founder Joe Kraus. "This isn't about Hollywood versus Silicon Valley, it's about the innovators versus the incumbents."

The meeting at Intel's Santa Clara headquarters drew about 160 local technology industry executives. The generally pro-technology panelists said Silicon Valley needs to become more aware of the issues involved in a slew of copyright protection lawsuits.

The panelists also said attempts by the movie and recording industries to control digital piracy could result in new laws and regulations that will affect all future products invented by Silicon Valley firms.

"We're taking a step toward getting people in the valley more engaged in the political process," Kraus said.

Napster was the file-sharing program used by millions of people worldwide to swap free copies of songs before copyright infringement suits by the world's biggest record labels succeeded in shutting the firm down. Since then, the music and movie industries have filed numerous suits against other companies to prevent further Napsterization of their products.

One of those pending suits is against Sonicblue Inc. of Santa Clara over the file-swapping and ad-skipping features of its ReplayTV digital video recorder. Sonicblue Chief Executive Officer Greg Ballard said his company is spending $3 million per quarter on legal fees to defend itself.

Ballard said the legal costs are in turn preventing Sonicblue from hiring about 120 employees who could drive future innovations for the company.

But another panelist, state Sen. Howard Berman, D-North Hollywood, said the "serious problem of piracy" is also taking a toll on the movie and music industries.

Berman last year introduced a bill that would allow motion picture studios and the recording industry to use technological countermeasures to deter the billions of free music and movie files from being traded by Napster successors like KaZaa and Morpheus.

"How are you going to get investment in creative works if they are not protected?" Berman asked.

The Digital Millennium Copyright Act of 1998, designed to protect copyright holders in the Internet age, is having an unintended effect on firms beyond the entertainment industry.

For instance, Lexmark International, which makes printers, has invoked provisions of the DMCA in a suit against Static Control Components, a Sanford, N.C., firm that makes parts for small companies that remanufacture and resell toner cartridges.

"We're a small, family-held company," said Skip London, Static's general counsel and vice president. "It's not just money going to lawyers, it's also everyone is worried about it. We spend a couple hours a day talking about the case."